One month ago, the US Commerce Department issued an exceptionally broad set of prohibitions on exports to China of semiconductor chips and other high-tech equipment.
The very technical nature of the export controls might obscure just how consequential this new policy could be — perhaps among the most important of this administration.
The new rules appear to mark a major shift in the Biden administration’s China strategy, and present a substantial threat to high-tech industries in China, including military technology and artificial intelligence. Washington think tank CSIS called the White House’s new approach to the Chinese tech sector “strangling with an intent to kill.” A Chinese American tech entrepreneur tweeted that China’s chip businesses fear “annihilation” and “industry-wide decapitation.”
Dominance across cutting-edge technologies has long been a centerpiece of Beijing’s vision for the country’s future. China can already compete with industry leaders across a range of leading-edge technologies, but global semiconductor production is still dominated by a few corporations, none of them Chinese. China is dependent on foreign chips; the country spends more per year importing chips than oil.
But the new export controls ban the export to China of cutting-edge chips, as well as chip design software, chip manufacturing equipment, and US-built components of manufacturing equipment. Not only do the prohibitions cover exports from American firms, but also apply to any company worldwide that uses US semiconductor technology — which would cover all the world’s leading chipmakers. The new rules also forbid US citizens, residents, and green-card holders from working in Chinese chip firms.
In short, the Biden administration wants to prevent China from buying the world’s best chips and the machines to make them. These top chips will power not only the next generations of military and AI technologies, but also self-driving vehicles and the surveillance tech that Beijing relies on to monitor its citizens.
What are the stakes of the Biden administration’s move? How will China respond? Where does this geopolitical drama go next? To find out, I spoke with Jordan Schneider, a senior analyst for China and technology at the Rhodium Group, a research firm. A transcript of our conversation follows, edited for length and clarity.
Michael Bluhm
What is the Biden administration hoping to achieve with these export controls?
Jordan Schneider
In a speech in September, National Security Adviser Jake Sullivan gave a new justification for US thinking about export controls of emerging technologies in China. He made the case that certain technologies are “force multipliers,” and so important to future economic and national security eventualities that the US needs to do whatever it can to increase the gap between American and Chinese capabilities.
Because of that, you now see these path-breaking and very aggressive tech controls on semiconductors. The goal is to maintain, for certain foundational technologies, as large a lead as possible for the rest of the world ahead of China.
Michael Bluhm
Observers in both the US and China have said that this is a tremendously important move by the Biden administration, for both technology and geopolitics. How big of a deal is this?
Jordan Schneider
It’s a big deal for the Chinese semiconductor industry. It’s a big deal for the global semiconductor industry. When you’re weighing its importance in the entirety of US policy, it is a relatively niche thing, but it’s important because it’s an inflection point.
It’s the first manifestation of this new doctrine that Jake Sullivan put forward, and it’s likely to play out across a number of different technologies. Alan Estevez, the undersecretary of commerce who leads the Commerce Department’s Bureau of Industry and Security, said in late October that the US is not necessarily going to stop at…
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